The BBC Pension Scheme has secured a longevity swap with global insurer Zurich for more than £3 billion of pensioner liabilities.
Reinsurer Canada Life was also involved in the de-risking transaction, providing cover to Zurich.
The deal will give the BBC scheme and the BBC, as sponsoring employer, with protection against the risk of rising costs as a result of members living longer than expected.
Aon served as lead transaction adviser, negotiating terms with Zurich and brokering the reinsurance side with Canada Life.
“We are delighted to have helped minimise the longevity risk of the BBC Pension Scheme. We are also grateful to Canada Life Re for their flexible approach,” said Greg Wenzerul, Zurich’s Head of Longevity Risk Transfer.
“This is an example of how large pension schemes can successfully hedge longevity risk in a cost‐effective and low risk way.
“We set out to lower the perceived barriers for pension schemes seeking longevity‐only de‐risking and using a UK regulated insurer to structure the deal offers trustees a secure, simple and flexible solution.”
Catherine Claydon, Chair of the Scheme Trustee Board, said the trustee is pleased to have been able to take the important step in its risk management strategy and “significantly reduce one of the key risks that all pension schemes face, namely the uncertainty in relation to how long members will live, and pensions will have to be paid for.”
Jeff Poulin, Global Head of Canada Life Reinsurance, explained, “Congratulations to all teams involved in executing this significant new transaction with the BBC Pension Scheme.
“Canada Life Reinsurance has been active in the UK longevity reinsurance market since its inception and have looked to support our clients with pragmatic and flexible solutions.
“We are pleased to have been able to build on our existing relationships with Aon and Zurich in order to support the Trustee on its de‐risking journey.”
Martin Bird, Senior Partner and Head of Risk Settlement at Aon, added, “At a time of exceptional volatility, it’s great that we have been able to support the Scheme Trustees with the successful execution of this important transaction to further protect against future funding risk and safeguard members’ interests.”
